Maui Milk is seeking new suppliers of sheep milk located within two hours of Hamilton for a new supply agreement with Danone.

Milk from free range, grass fed dairy sheep is now supplied by Maui Milk to Danone from its two farms running 6000 ewes on the western shores of Lake Taupo.

The company is offering multi-year contracts to new conversions in greater Waikato with the aim of doubling milk volume next season.

Danone-owned Nutricia, a global leader in specialised nutrition, last month launched Karicare Toddler Sheep Milk formulation, its first such product and a significant step for the New Zealand sheep dairy industry.

The Karicare brand is a leader in Australia and New Zealand, says Nutricia.

The Maui supplied milk is processed at Innovation Park in Hamilton.

Maui Milk chief executive Peter Gatley says there is interest from sheep and beef farms around Taupo, Rotorua and King Country, but mostly from Waikato dairy operations.

“Comparison with a typical Waikato dairy farm shows a better return per hectare, especially on smaller farms in the 50-80 ha range,” he said.

“The system is all grazing, no barns are required and the lactation is shorter than for cows. A lot of farmers are also attracted because the environmental footprint is similar to traditional sheep and beef farming.

“Conversion from dairy cattle is low cost and we are offering multi-year contracts at a payout equivalent to $3/L. We can supply pregnant ewes during winter so a farm can dry off the cows in autumn and be milking sheep in spring.”

Maui Milk was formed five years ago to satisfy demand for alternative milks, particularly in Asia where many people find cow milk hard to digest.

The company highlights the natural advantages of sheep milk which contains much higher levels of most nutrients than either cow or goat milk.

Maui chairman Peter McGilvary explains that whole milk powder sold under the Maui Milk brand was a stepping stone during the establishment phase and an expanded product range was always expected.

“The opportunity to supply the early childhood nutrition market is exciting,” said McGilvary.“The educated, affluent consumer wants grass fed dairy for their children and they focus strongly on environmental sustainability and animal welfare.”

Gatley says the company has made huge strides in farm productivity improvement.

“Progress has been spectacular. Until recently it was impossible to breed a modern dairy sheep in NZ because the genetics simply did not exist here. That all changed when we imported semen and embryos from Europe.

“Sheep can milk as yearlings and they have multiple offspring.

“We’re making 50 years progress in about five years.”

McGilvary says the company is working on complementary products to sell under its own brand and is buoyant about the prospects.

“Whatever form the product takes, we see grass fed sheep milk as the perfect fit for ‘brand NZ’. It’s what we’re famous for -- grass, sheep and milk.”

For Nutricia, its toddler sheep milk product innovation responds to growing demand among consumers in Australia and NZ for toddler formulas based on alternative sources of milk, such as goat and sheep milk.

“As consumer preferences continue to evolve it’s important that we, as market leader in Australia and New Zealand, are able to cater accordingly. Also, this launch is an opportunity to serve other consumers with similar tastes in the region, and who value NZ’s renowned agricultural and sheep farming heritage and the country’s natural environment.

“Plus, through this launch we’re supporting our local dairy sheep farms,” said John Hoare, sales director at Nutricia ANZ.

The milk for the launch of Karicare Toddler Sheep Milk is sourced from Maui’s two farms.

A few years ago Andy Geissmann was invited to speak on a farm in China where a dairy consortium planned to milk 500,000 goats.

“I thought they meant 5000 or maybe 50,000, that they had got the number wrong, but then someone wrote it down for me in words: ‘half a million’.

“We went there and it was the first farm of a bigger project, planning to milk 70,000 goats all in one farm, just two years away from milking.

“They planned to have half a million goats spread over several farms in one hub, and they planned to have three of those hubs in the surrounding area.”

Geissmann, who recently joined Waikato Milking Systems, has had 20 years experience in the dairy industry, recently with a focus on small ruminants. He is now the product and project manager at its headquarters in Horotiu, north of Hamilton.

Geissmann says the sheer size of the China operation overshadows anything planned in New Zealand, but he says Kiwis should not be discouraged from exporting to China and other countries.

“In China, there are basically two market streams. People who can afford the local produce and those with additional disposable incomes.”

The latter group of consumers don’t mind paying a “premium price” for dairy products made in a country that has a clean, green image.

“And NZ does have the right image.”

Those marketing sheep milk dairy products promoted the idea that the customer was not only buying a NZ made product but buying a piece of NZ too, Geissmann said.

Geissman is this week attending Fieldays to hear more from those working in the emerging sheep dairy industry and the niche goat dairy industry. This will help guide the company in developing systems and technology for the sheep and goat dairy industries.

Geissmann sees growing awareness of the nutritional benefits of sheep and goat milk products which “has resulted globally in an increased consumption”.

The lower environmental impact of the two industries is a big attraction for consumers, he said. It is opening opportunities for expansion for farmers and manufacturers.

That includes Waikato Milking Systems, which in 2017 installed a 100 bail, goat rotary milking system in Canada and is now working on similar installations in China.

The company is also aiming to do more in NZ to help the sheep and goat industry meet demand. “We want people to know we’re dedicated to sheep and goat dairying and are not just transforming a cow milking system into something smaller,” Geissmann said.

“We want to use our knowledge and farmers’ expertise to further develop milking systems specifically suited to small ruminants.”

He said it is important to understand that the behaviour and physiology of sheep and goats is different.

Goats are “always on the go”, they are inquisitive animals that like to investigate things. They like being up high, don’t like to lay around much and don’t like getting wet.

Sheep are followers, need eye contact with each other and don’t like to be seperated.

All of these traits need to be taken into account when building milking systems to handle the animals.

The company’s milking platform in the market can handle both sheep and goats.

“We have worked closely with farmers in the design of our milking platform. The result is a system that is well received for its milking performance and durability.”

Geissmann is on the Waikato Milking Systems Fieldays site (F45-M12-M14) and the SheepMilkNZ site (J22).

Steady rise in markets

Andy Geissmann says NZ has about 100 dairy goat farms with almost 70,000.

Sixteen dairy sheep farms NZ-wide are milking about 15,000 ewes. The sheep milking industry is growing by three to four farms a year but many more are needed to satisfy the global demand.

Geissmann says some farms are producing for niche market outlets and others produce for the local and export markets.

Some farms want to expand commercially by producing their own milk and collecting milk from other farms to process. In the sheep dairy business these include Kingsmeade in Manawatu, Antarag Ag Dairy in Southland, Thorvald in Nelson, and Spring Sheep and Maui Milk in Waikato.

The Dairy Goat Co-operative collects milk from its farmers in many North Island regions to process at its plant in Hamilton.

The Ministry of Primary Industries does not report separately on the value of the sheep and goat milk industry, but includes it as one report on dairy.

The ministry said there is data showing the global market for goat milk was worth US$330m in 2013 and is now worth US$390m.

Data from the UN Food and Agriculture Organisation showed the world volume of goat milk increased from 10m tonnes in 1990 to 17.5m tonnes in 2017.

World sheep milk production was 8m tonnes in 1990 and slightly exceeded 10m tonnes in 2013.

Good growth in the sheep milking industry during the 2018-19 financial year signals this is a good time for farmers to get involved, says Spring Sheep Milk Co, who will be at Fieldays this week.

The firm’s producer business manager, Thomas Macdonald, says international demand for New Zealand sheep milk products is strong. And more farmers are inquiring about converting their dairy farms to sheep milk, he says.

“Heading into our fifth dairy season we are noticing a lot more interest in the industry,” says Macdonald. “Last year, I might have received around one inquiry a month from a farmer looking at options, but those inquiries are now coming in thick and fast.”

Macdonald says with Spring Sheep being demand-led they will only bring in more suppliers when the demand is there, which is now.

“We have 4000 sheep being milked. But strong customer demand means we are now looking to grow sheep numbers by bringing in new supplier farmers.”

Most milk demand is from Asia where consumers want alternative milks and nutrition products, Macdonald says. Growth in this market is on Spring Sheep’s agenda.

Previously, NZ-bred ewes were producing 120L each per season, but the new, high-performing genetic lines have the potential to increase production to 600L per ewe per season.

“Most farming systems need about 250-450L per ewe per season to achieve a good return. So the improved productivity we’re seeing presents a good opportunity for farmers considering a conversion to sheep dairy farming.”

The company has two farms, one near Cambridge and one in Reporoa, near Rotorua. It has just finished its first season successfully running three farm system trials: full grazing outdoor, hybrid indoor outdoor grazing and large scale hybrid models.

Milk from its farms is then processed at Melody Dairies’ spray drier at Waikato Innovation Park in Hamilton.

Macdonald says dairy farmers in Waikato region, being within the two-hour travel zone for processing, are ideal future suppliers.

“Waikato region is rich dairy country, and the pastoral farming practices and core skillset of dairy farming found there is easily transferred to sheep milk.

“The optimal sheep milking system in NZ requires the use of high-performance genetics, combined with a farming system that uses our pastoral advantage. We now have those genetics available, and we’re looking to work with passionate, skilled dairy farmers with high-quality land.”

Macdonald says the growth in the industry is encouraging for farmers who are looking at sheep milk as a viable, high-return farming option.

“As a value-added product, sheep milk isn’t at the mercy of fluctuating market prices so the farmgate price remains stable,” he says.

There are several positive environmental impacts for farms converting from cow dairy to sheep milk.

“Converting to sheep milk doesn’t require any land use intensification, and there’s a positive impact on water use and nitrogen leaching,” he says.

“We partnered with AgResearch to do nitrogen leaching trials on our farms, with results showing a 30% reduction in N-leaching compared to an equivalent stocked bovine operation.”

Macdonald says the strong demand for sheep milk products from the market, combined with four seasons of operational experience on Spring Sheep’s farm group, paints a positive picture for the sheep milk industry.

• To find out more on purchasing dairy sheep and supplier contracts, visit Spring Sheep Milk Co at the 2019 National Agricultural Fieldays at Mystery Creek, 12-15 June, at stand J22.

The sheep milk industry is setting its sights on the dairy industry as it looks to pick up more farmer suppliers.

Sheep milk producer Spring Sheep Milk Co, claiming good growth during the 2018-19 financial year, says the time is right for established farmers to get into the industry.

Business manager Thomas Macdonald says international demand for New Zealand sheep milk products is strong, and he’s noticed more farmers inquiring about converting their dairy farms to sheep milk.

“Heading into our fifth dairy season we are noticing a lot more interest in the industry,” says Macdonald. “Last year I might have received around one inquiry a month from a farmer looking at their options, but those inquiries are now coming in thick and fast.”

Spring Sheep milks 4000 sheep on three farms in central North Island. Milk is processed at Melody Dairies’ spray drier at Waikato Innovation Park in Hamilton.

Because demand is mostly from Asia, driven by consumers’ increasing preference for alternative milks and nutritional focused products, growth in this market is high on Spring Sheep’s agenda, Macdonald says.

Dairy farmers in Waikato, being within the two-hour travel zone for processing, would be ideal suppliers, he says.

“The Waikato region is rich dairy country, and the pastoral farming practices and core skillset of dairy farming found here are easily transferred to sheep milk.

“The optimal sheep milking system in NZ requires the use of high-performance genetics, combined with a farming system that utilises our pastoral advantage. We now have those genetics available and we’re looking to work with passionate, skilled dairy farmers with high-quality land.”

“But if the returns are there and it is a viable option then I don’t see why farmers wouldn’t look at it,” he told Dairy News.

“Most I know are looking at organics to improve the bottom line, but if sheep milk has a better operating profit and is more environmentally sustainable then it will appeal to some.

“Milk prices in dairy farming have been very volatile for some time now as we all know, so if sheep milk can give a more stable rate of return and avoid some of the rigorous compliance requirements that dairy are subjected to, then it could be an attractive alternative, especially for the smaller farms,” says McGiven.

Productivity doubles

Last year Spring Sheep doubled its productivity thanks to new genetic lines imported from Europe.

Previously NZ-bred ewes were producing 120L each per season, but the new high-performing genetic lines have the potential to increase production to over 600L per ewe per season.

Spring Sheep business manager Thomas Macdonald says most farming systems need about 250-450L per ewe per season to achieve a good return.

“So the improved productivity we’re seeing presents a good opportunity for farmers considering a conversion to sheep dairy farming.”

Spring Sheep has two farms near Cambridge and one in Reporoa. It has just finished its first season successfully running three farm system trials: full grazing outdoor, hybrid indoor-outdoor grazing and large scale hybrid models.

Macdonald says the growth in the industry is encouraging for farmers who are looking at sheep milk as a viable, high-return farming option.

“As a value-added product, sheep milk isn’t at the mercy of fluctuating market prices so the farm gate price remains stable,” he says.

He recommends two farm models for those looking to get into the industry: a hybrid indoor-outdoor grazing model and a fully outdoor grazing model.

“The grazing model, a bovine-to-ovine conversion, is a former cow dairy farm that’s retrofitted with sheep milking equipment and fences. It has the lower cost of entry of the two models and is highly recommended for those looking to enter the industry.

“We can also provide great wraparound support for farmers, with a tailored farm support programme drawing on our own sheep milking expertise, access to genetically superior dairy sheep and farm data, training and the option of fully managed farms.”

A new milk spray dryer to be built next year in Hamilton will help New Zealand’s advance in infant formula and specialty ingredients, say its investors.

The $50 million dollar dryer, at Waikato Innovation Park, will be managed by Food Waikato. It has formed a new company, Melody Dairies Ltd Partnership, of which Pamu Farms (formerly Landcorp) owns 35%.

The venture has three other backers: Nu-Mega Ingredients (NZ), owned by Clover Corporation Ltd with a 35% share in Melody Dairies; Dairy Nutraceuticals Ltd (20%); and Food Waikato (NZ Food Innovation Waikato) with a 10% share.

Carden says the investment will support Pamu’s strategy of adding value within and beyond the farmgate.

“For the last five years Pamu has been pursuing a strategic approach aimed at future-proofing the company by diversifying our earnings potential, and helping mitigate the commodity cycle that holds the company hostage to some extent. This investment fits with this strategy, and we expect it to contribute to the growing earnings and financial resilience of Pāmu in the years ahead.”

He said the move is also good for NZ’s growing, award-winning sheep milk industry, in providing “an additional option for drying the milk from our Spring Sheep joint venture, at a time when capacity for such specialist facilities is severely stretched”.

“We will also be able to access our share of capacity in the dryer for processing other specialist milks, such as our pure organic milk powder, which we are about to start selling in China.”

Carden says any capacity Pamu or its JV partners do not use can be on-sold to other users.

“This is good news for the Waikato region, the centre of our sheep milking and organic milk operations.”

Pāmu’s 35% stake in Melody Dairies is being financed through existing balance sheet capacity and is valued at $11 million.

“Spring Sheep is growing as we see global customers start to recognise the unique taste and properties of our milk, and the provenance of the product. This investment will help secure the future of Spring Sheep.”

Capacity booster

Construction of the spray dryer is expected to start this month for start-up by November 2019.

It will be built alongside the existing dryer and will have 2.4 times its capacity. It is expected to earn $129 million in exports a year.

The Food Waikato plant opened in May 2012 and the existing open-access development dryer is running at capacity, producing $51 million in export product for the year.

The existing dryer will remain available for new businesses and products, with increased capacity available as some clients switch to the new dryer.

A director of Innovation Waikato, and former chief executive of Dairy Goat Cooperative, Dave Stanley, says having Pamu as a cornerstone shareholder was critical to the new dryer venture.

Farmers between Auckland and Taupo can now take the plunge into sheep milk, says Maui Milk general manager Peter Gatley.

The company, a joint venture between Waituhi Kuratau Trust (WKT) and the Chinese company Be Well Food Group, Shanghai, is offering supply contracts.

A field day will be held at Maui Milk’s Waikino Station Farm on the western shores of Lake Taupo on November 21 to update farmers on genetic improvement and farm system development.

Maui Milk processes its milk at the Innovation Waikato dryer in Hamilton.

The company is willing to collect new milk within two hours drive from the dryer.

Maui Milk sheep milk powder is sold in China.

Gatley says he is regularly contacted by farmers keen to make a change.

“They all want profitability, stability and sustainability. They know about the success of the dairy goats, but many prefer the concept of sheep and grazing systems.

“One of our farms is all outdoors, the other makes some use of barns, but it’s still a grazing system. The big breakthrough was the importation of genetics. Prior to this season, no one in New Zealand had ever milked a modern dairy ewe.

“Now that we’re milking the new genetics it’s time to put some numbers on the table: capital, operating expenses, litres, kgMS, payout and the bottom line.”

Gatley doesn’t expect a large number of conversions to sheep farming because farmers are cautious by nature, he says.

He points to the Dairy Goat Cooperative at Hamilton, now a world leader in dairy goat infant formula.

“It went through a slow start as well; now they have a waiting list of farmer suppliers.”

Gatley also points out strong parallels with other types of farming.

“Once you have decided on your farm system the costs are largely fixed. We already know what the expenses look like, but there is a lot of potential to increase income from milk.

“In the past, large-scale operators in this country have struggled with lactation yields per ewe of only 100 to 150 litres. Barn systems in other countries put out 600L plus, but we look to the hybrid grazing system in France where 400L is standard.”

Grazing offers NZ a competitive advantage in production cost and product positioning.It is also the preference of most would-be new suppliers in NZ. They don’t want to spend their life in a barn, says Gatley.

The system at the Waituhi Kuratau farm is all outdoors -- no barns. The system at Waikino is also a pastoral system and the barns are there for lambing and occasional use during climate extremes.

“Having both systems enables us to compare the two. We may find both work well and it becomes a matter of preference, just as in the dairy cattle industry,” says Gatley.

Better breeding

Genetics has been a major focus of Maui Milk; Gatley spent at least 20 years in LIC and founded Deer Improvement.

Geneticist Jake Chardon spent a lifetime in genetic improvement; another geneticist, Marion Beniot, hails from the south of France and holds a masters degree in genetics.

Chardon made many trips to Europe, sourcing semen and embryos from there and UK.

Gatley says Maui Milk used three northern hemisphere breeds to create a crossbred ewe for the southern hemisphere, called Southern Cross.

“The concept is no different from the Kiwi cow: genetic diversity and hybrid vigour, with selection of milk volume, components, udders and temperament. We now have rams with two generations of progeny tested sires in their pedigree and sisters milking in New Zealand.

“We need bigger batches to give us processing efficiency and more product to make a splash in the market,” he says. “We’re prepared to send a tanker up to two hours from Hamilton so there’s plenty of scope for growth.”

The company processes its milk at Innovation Waikato and the resulting sheep milk powder is packed in sachets and sold in China.

Maui Milk general manager Peter Gatley says more sheep milk will help the company broaden its product range and embark on producing value-added products.

Its 25g sachets of sheep milk powder are marketed in specially designed boxes for export.

The company exports sheep milk powder to the Chinese market where it sells as a premium product liked by customers for its subtle flavours and creamy texture.

Sheep milk is better for human health than cow or goat milk, the company says. It is said to be easily digested and to contain more medium/short-chain saturated fatty acids which could help increase lactose absorption.

It is said to have higher levels of vitamins A, D, Eand C than either cow or goat milk and 50% more vitamin B12 than cow milk.

Gatley told Rural News that Maui Milk measures total solids including lactose; it aspires to match the dairy goat payout at about $17/kg. Sheep milk is about 18% solids so that works out at $3/L, so the prospect of a ewe earning over $1000 is possible, but two things need to happen.

“We need to demonstrate a big lift in yield, and our marketers need to perform well to tap into the top end of the market. The dairy goat guys have done it, but they have 30 years head start.”

Gatley says a milking demonstration earlier this year impressed everyone as ewes competed to get on the 64-bail internal rotary imported from France.

“At a rate of 1000 per hour with two milkers cupping, and automatic cup removers, it was an impressive performance.”

Sheep milk company Spring Sheep Dairy is a finalist in four categories of the NZ International Business Awards.

The Taupo-based joint venture between Pamu (Landcorp) and SLC Group is one of the eight finalists in the Best Emerging Business category.

Spring Sheep is also in the running for the Excellence in Innovation award, Inspiring Preference for NZ award and the Inspiring Women Leaders award, where its innovation and marketing director Andrea Wilkins is one of the seven finalists.

It has also won several food innovation awards since its inception three years ago.

The awards, organised by NZ Trade and Enterprise, will be handed out at a gala dinner in Auckland on November 8.

NZTE says Spring Sheep Milk is in the business of advanced nutrition, creating a market-driven, end-to-end value chain for sheep milk to expand into a significant new primary industry for New Zealand.

“The company makes delicious and nutritious New Zealand-made products from its flock of grass-fed sheep.”

Founded in 2015 this unique public-private partnership combinesthe best farming know-how and resources with branding and in-market expertise, it says.

Spring Sheep’s main markets are Taiwan, Malaysia and Vietnam, and its international revenue has grown by 88% over the past three years.

The company has 15 full-time staff as well as part-time seasonal farm workers based in New Zealand. It has worked with more than 50 local New Zealand suppliers, including farmers, advisors, researchers, scientists, manufacturers, designers and agencies, across all areas of its business.

A five year, $11 million research project has begun, aimed at producing new high value milk products.

Led by Professor Warren McNabb, of the Riddet Institute, Palmerston North, the project will seek better mechanistic understanding of the various milks produced in New Zealand including cow, goat, sheep and deer.

A particular aim will be to develop new products for babies, very young children and elderly people in New Zealand and, especially, for export.

Other research partners are Massey, Otago and Auckland universities, AgResearch and Plant and Food Research. And it has the backing of Miraka, Fonterra, Synlait, A2 Milk Company, Maui Milk, Spring Sheep Dairy, NIG Nutritionals, Pamu and the Dairy Goat Cooperative.

McNabb says that understanding the mechanistic differences in milk is critical because, while two foods may have similar composition, the nutritional consequences when these are eaten could be quite different. The key point is how the nutrients are structured within the food.

“The idea behind this programme is to look at the way those milks are structured in their raw state as well as when you process them into yogurt, cheese, etc.

“If you understand the structure/nutrition relationship you can really affect the way [the consumer] receives important nutrients from any food. Ultimately the aim is to understand how cow, sheep, goat and deer milk release nutrients.”

McNabb says once it’s understood how these interactions occur, the researcher can then see what can be done from a processing perspective to improve the nutritional value of milk and milk products.

The researchers want to understand how milks are digested and now nutrients are released into the body and what are the consequences for the consumer.

“The industry has a real interest in how to position milk as part of a whole holistic diet. It is not necessarily to find a particular protein in milk with some biological activity and then work out how to link that; it’s more to ask how do you manipulate whole milk into its products to maximise nutritional value? And how do we position milk in our diet because of its intrinsic health properties?”

McNabb says research done in Australia shows that if people had been drinking the recommended 500ml of milk a day, the savings to the health system there would have been huge.

Milk is a complete food containing minerals, trace elements and nutrients not found in another foods, he says. “Milk is one of the animal foods that is concentrated full of nutrients that are important to us.”

The first student to have won a NZ Agricultural Fieldays Sir Don Llewellyn Scholarship is now working in the flourishing sheep milk industry, one he says is growing fast into a viable new industry for NZ.

Spring Sheep Milk Company business manager Thomas Macdonald (24) says his 2014 Sir Don Llewellyn Scholarship enabled him to keep studying to get his masters degree at Waikato University.

The scholarship is awarded each year to graduate students doing specific research in agriculture at Waikato.

Macdonald studied agribusiness at Waikato and his post-graduate research looked at the cost of environmental compliance in a range of farming systems – which contributed to informing the conversation around future regulation and policy.

“It looked at how farmers can shift their farm system to meet the new requirements and it bridged the gap between the regulator, i.e. the council, and the farmer and put solid information out there on what farmers had actually spent,” Macdonald told Dairy News.

He surveyed about 50 farmers and got real data that was then published to inform the discussion about what farmers had already committed to the cause.

He looked at the efficiencies, or otherwise, of a farmer becoming compliant with new effluent and nitrogen leaching requirements. The work showed, basically, that a “sweet spot” exists at either end of the farming systems model where a farmer makes enough money to cover respective compliance costs.

“There is no point in having high pollution and then not making enough money to cover the cost of the pollution,” Macdonald says.

“The take-out message was ‘pick a system and stick to it’ at either end of the model; don’t be halfway there. There are options for reducing nitrate leaching exposure, including cow housing and destocking.”

Macdonald says the Sir Don Llewellyn Scholarship was the sole reason he stayed on to study; it made it viable.

When he left university he ran a group of five dairy farms for Landcorp on the Central Plateau.

Three years ago he joined the sheep milking industry and is now business manager for Spring Sheep Milk Company. He says progress has been “fantastic” and they are now in high growth mode.

“We have just been nominated for the NZ Export Awards at the front end of the business and we are growing the farming side with two new properties into sheep milking.”

NZ now has high-yielding dairy sheep, made possible through the importation of European dairy genomics.

Macdonald in March this year beat Australian and New Zealand candidates for the prestigious 2018 Zanda McDonald Award.

The award, regarded as a badge of honour by the agribusiness industry, recognises innovative young agri professionals from both countries. It was launched in 2014 in memory of Australian beef industry leader Zanda McDonald, who died aged 41 after an accident at his Queensland property in 2013.

Now in its fourth year, the award is run by the Platinum Primary Producers (PPP) Group, a network of 150 of Australasia’s influential agribusiness men and women, of which Zanda McDonald was a foundation member.

Helping students

The NZ Agricultural Fieldays Sir Don Llewellyn Scholarship was established by the funder, the NZ National Fieldays Society Inc.

Last year’s winner was Shannon Hunter, researching to establish whether the virus that causes root rot in NZ avocado orchards is developing resistance to phosphite, which is commonly used to treat dieback.

The scholarship was founded to assist students to do research at the University of Waikato with a specific focus on the agricultural sector.

The University of Waikato has a long association with the Fieldays: its founding vice-chancellor Sir Don Llewellyn helped with the event’s founding.

The sheep milk industry has made huge strides in the last four years, says Massey University associate professor Craig Prichard.

The 4th annual Sheep Milking Conference was held in Palmerston North last week, attracting 150 producers, scientists and interested observers.

Prichard, known as a driver of the industry, says four years ago only four cheese makers attended; this year there were 16.

He says in four years the industry has moved from being “gee whizz isn’t that interesting” to a serious business with a future.

“I’m not getting calls from people asking what sheep milk tastes like. Instead the calls are from people asking, can you tell me more about it – the returns, investment required and products you can produce?”

Prichard says sheep milking has made big strides in the last year, giving the industry confidence and attracting new producers.

He points to the importation of new genetics to increase milk production and the industry’s profile being boosted by a sheep cheese wining the top overall cheese award.

“We are moving into the next zone, which I would see as more sheep milk producers coming on in Waikato and South Waikato, working with two major companies – Spring Sheep Dairy and Maui Milk. This is a new era but not a boom-or-bust situation.

“People are making careful decisions to engage with a new potential sector. What’s important to notice now is this interest is coming even when the cow milk price is relatively good and at the same time as lamb and beef prices are also relatively good.”

Prichard says people are seeing the sheep milk industry as a viable form of diversification – a way of expanding their business portfolio. They are seeing the returns and recognising the shift taking place and want to be a part of it.

Big growth is visible: one company grew 400% last year. New large producers are entering the industry – people with flocks of 300 to 400 sheep.

“They are not lifestylers; these are trying to make a business producing sheep milk. We are in a whole different space from what we used to be.”

Research will feed growth

Craig Prichard notes the research work AgResearch is doing as part of an MBIE project.

This research will help drive the direction of the sector and, in particular, the health benefits of sheep milk and its associated products, he says.

And research into sheep milking’s environmental benefits will also give it a push. Long-term research is aimed at getting definitive results on nitrogen loading and leaching, and results from looking at all sorts of feed crops.

“There are good stories coming through on the environmental side,” he says.

Prichard hopes that in the next couple of years New Zealanders start to realise that sheep cheese is an important part of our cheese diet. Sheep cheese makers are keen to contest awards and this will help lift the profile of the sector.

“I am hoping some established cheese makers will get involved.

“Even Fonterra -- God forbid -- may take an interest in doing something interesting with sheep milk and producing a distinctive sheep cheese from different regions that will stand up in the international market,” Prichard says.

Younger people's quest for unique and interesting foods will be a key driver in the growth of the sheep milk industry.

That’s the view of Professor David Thomas, from the US, who spoke at last week’s dairy sheep conference in Palmerston North.

Thomas has been researching sheep at the University of Wisconsin for 40 years, spending at least half that time on dairy sheep.

In the unique foods category sheep milk products fit perfectly – notably cheese. The last 20 years has seen a marked increase in imports of sheep cheeses.

“The US imports about 50% of world exports of sheep milk cheese and we currently produce a very, very small amount of it. So there is potential for growth in our domestic market. The main countries we import from are Italy, Spain, Greece and France.”

But the US dairy sheep industry is small and most of the sheep flocks are relatively small, averaging about 150 ewes. New Zealand has more and larger flocks than the US.

The US dairy sheep industry is mainly in the Midwest, Wisconsin and the north-east.

“Interestingly, New York would probably be the biggest state for dairy sheep production,” he says.

A large sheep dairy industry is developing in Canada, especially southern Ontario and Quebec. However, hard data is lacking: there are no national records on the dairy sheep industry in all North America.

Sluggish growth seen in the US dairy sheep industry is a pity because sheep milk is very ‘efficient’: it has a much higher solids content than either cow or goat milk.

“It takes five kilograms of sheep milk to make a kilo of sheep milk cheese, whereas it takes 9-10 kg of cow or goat milk to make a similar amount of cheese.”

Challenges ahead

A big challenge for dairy sheep farmers is getting a market for their raw product, says Professor Thomas. Many people are interested in coming into the industry, but not to process the product; instead they want to produce raw milk.

“The challenge is finding processors who are willing to try sheep milk and develop artisan cheeses out of that sheep milk,” Thomas explains.

Another challenge is getting production to levels where they provide a reasonable return on investment. Thomas says there is nothing in the US to provide impetus to lift production.

He’s aware of the recent initiatives in NZ to improve the genetics of the dairy sheep industry, an excellent move that will improve the profitability of the NZ industry, he says.

And he is impressed that NZ has developed sheep milk powders, something not done in the US.

A new breed of milking sheep and a demonstration farm with a 64-bail internal rotary have set the ball rolling for the dairy sheep industry.

The Wakino Station, on the western shores of Lake Taupo, is the home Maui Milk, a joint venture between the Waituhi Kuratau Trust and Shanghai food company Be Well.

The JV has milked 3000 ewes on a neighboring farm run by the trust since 2015; lessons learned are being implemented in the green-field development at Waikino Station which adds another 2000 ewes to the tally.

Last month the Wakino Station hosted an open day; about 300 farmers, rural bankers and accountants attended.

He says New Zealand needs diversification in agricultural exports and every farmer wants a high value product, stable pricing and environmental sustainability.

“We admire what the dairy goat industry has achieved, but we want to capitalise on NZ expertise in both sheep farming and pastoral systems for milk production.”

A hot topic among visiting farmers at the open day was profitability. Gatley points out that the parallels with other types of farming are strong.

“Once you have decided on your farm system, the costs are largely fixed. We already know what the expenses look like, but there is a lot of potential to increase income from milk.

“In the past, large scale operators in this country have struggled with lactation yields per ewe of only 100 to 150 litres. Barn systems in other countries put out 600L plus, but we look to the hybrid grazing system in France where 400L is standard.

“Grazing offers us a competitive advantage in production cost, but it is also key to our product positioning. It is also the preference of most potential new suppliers in NZ. They don’t want to spend their life in a barn.”

The system at the Waituhi Kuratau farm is all outdoors; there are no barns. The Wakino Station has two Aztech barns with feed conveyors.

Gatley says the barns are there for lambing and occasional use when there are climate extremes.

“Having both systems enables us to compare the two. We may find both work well and it becomes a matter of preference, just as it is in the dairy cattle industry.”

Payment is expected to be based on milksolids.

“Like the dairy goat industry we measure total solids including lactose, and we aspire to match the dairy goat payout at about $17/kg.

“Sheep milk is about 18% solids so that works out at $3/L, so the prospect of a ewe earning over $1000 is possible, but two things need to happen. We need to demonstrate a big lift in yield, and our marketers need to perform well to tap into the top end of the market. The dairy goat guys have done it, but they have a 30 year head start.”

A milking demonstration impressed everyone as ewes competed to get on the 64-bail internal rotary imported from France.

At a rate of 1000 per hour with two milkers cupping, and automatic cup removers, it was an impressive performance.

Maui Milk does not expect any new conversions this year, but advises farmers who are contemplating a move in 2019 or 2020 to first think about breeding the sheep.

“The lowest cost and lowest risk part of the whole exercise is breeding the animals, but it takes time and no amount of money can turn back the clock.

“Putting some rams out this year would provide first-cross hoggets to milk next year, or first-cross two-tooths in 2020 backed up by second-cross hoggets. We have rams available from our ET and AI programmes and potential new suppliers can lease these to get underway,” says Gatley.

The sheep milk industry has seen a breakthrough in getting semen from European milking sheep approved for entry to New Zealand.

Involved in this is Maui Milk, a large Maori-owned farm with 4000 ewes, partnering with Chinese businessmen to produce sheep milk products. The farm, Waituhi Kuratau, is located on the western shores of Lake Taupo.

General manager Peter Gatley says genetics hold the key to ramping up NZ sheep milk production, which is still relatively low by world standards.

Last year, Maui Milk bought 1000 straws of semen from Lacaune rams in the hope that MPI would grant approval, which it has now done, Gatley says. The straws have been stored in France pending import approval.

The Lacaune is a milking sheep breed, commonly located in southern France and regarded as among the world’s highest yielding milk sheep breeds. It is popular in the Roquefort area which is famous for sheep cheeses.

“The straws are frozen and in quarantine; they have semen from 45 different rams so they are genetically diverse,” Gatley told Rural News. “They have now all passed their disease tests, so the semen could be on a plane within the next couple of weeks.”

He says the semen will be put across the ‘F1 first cross’ -- a Coopworth East Friesian animal -- yielding a sheep half Lacaune, quarter East Friesian and quarter Coopworth.

“We have detailed plans to inseminate 4000 ewes onfarm during April and May, a big job because every one of those inseminations involves laproscopic surgery,” Gatley explains.

“It’s not simple AI like on a cow; it’s a big project. But we have that all nailed down and mapped day by day and provided the semen arrives safely it looks like we’ll have Lacaune genes on the ground in spring.”

Gatley says around Roquefort, where some 800,000 Lacaune sheep are located, there is a sizable industry base with lots of knowledge and technology Maui hopes to tap into.

Maui Milk plans to import a specially designed sheep milking rotary platform which will be the only one of its kind in NZ.

The purpose of importing the genetics is to show that Maui Milk can create a viable farm system others can see, Gatley says. The company will help others and provide knowledge to them on the basis that they will also share information with Maui. Information sharing is well recognised within the industry; big players do this regularly.

Despite the Lacaune sheep originating in a cheese making area of France, Maui Milk does not now intend going into cheese production, Gatley says.

“We have supplied milk to local cheese makers and we may continue to do that, but the bulk of our product is dried milk – a whole milk powder. Later on it could be a range of products in dried form. There could even be infant formula, but for now WMP is the bulk of what our milk is used for.”

Gatley hopes the new genetics will make for greater production and by yielding more milk will allow the company to produce larger batches and help reduce overall production costs.

New Zealand's sheep milking industry plateaued a bit in the last year, says an organiser of last week’s Sheep Milk NZ Conference 2017.

But this is good, says Craig Prichard, of Massey University’s School of Management, because he would hate to see people get too excited, given that the industry still has a long road to travel.

The industry faces big challenges and its emphasis now is on improving the genetics of milking sheep in NZ and on developing new food products.

Farmers, scientists and agribusiness professionals attended the conference, as did people from Australia and France, including staff from a company supplying genetics to NZ farmers.

Prichard says some people think sheep milk is still novel, but he wants them to get over that novelty notion and focus on the great food dishes and other things the NZ industry is producing.

“NZ already produces some amazing sheep milk cheeses,” he told Rural News. “Once we have worked out what their particular strengths are we’ll find a cheese that will rival others around the world.”

He says the tastes and styles of sheep milk products vary from region to region in NZ, as in Europe. He points to a sheep milk cheese maker in Nelson whose cheeses have a very distinctive flavour.

“And Kingsmeade Cheeses, in Wairarapa, and the new group emerging there, are working on a product range that is really exciting. Obviously you have three big producers all pushing hard to get their production up to get some return on their investment.”

Prichard says soils and weather influence product style and taste, and regionality is important in developing high-value sheep milk products.

High praise is being heard for New Zealand’s sheep milk products from a leading chef.

Marc Soper, executive chef at the prestigious Wharekauhu luxury lodge in Wairarapa, last week set up his demonstration kitchen at the annual sheep milk conference in Palmerston North, to show how he uses sheep milk products in meals he prepares for rich and famous guests.

About 150 people attended the three-day conference, which also included a day looking at Tararua and Wairarapa sheep milking and cheese making.

Soper says sheep milk’s low lactose content is a huge advantage. This enables him to create a panna cotta dish – which he demonstrated – with properties you cannot get with cow’s milk – a sweet, creamy, nutty after-taste.

Sheep milk products are versatile, said Soper, demonstrating this to attendees, a few of whom were lucky enough to taste his creations.

NZ-made sheep cheese, gelato and milk all featured in his recipes.

Soper mentioned his special relationship with Miles and Janet King of Kingsmeade Cheese, Wairarapa.

“I often drop into their shop and chat. I have been on the farm and see what they do and we talk about how we can improve the product for the benefit of the consumer, and I can use sheep milk products better as a chef. Collaboration works well.”

Soper has used sheep milk products for some time at Wharekauhau and diners there are “over the moon” about what they see and taste. Other chefs are now catching on, he says.

“Chefs are slowly getting it: the gate-to-plate movement of the past four to five years is getting stronger and stronger. People want to know where their food is coming from – the story.

“If you can tell the grassroots story of where it comes from it lifts the value of the product to a much higher scale.”

New Zealand’s growing sheep milk industry now boasts more than 30,000 sheep for milking at 16 different producers.

They provide quality sheep milk products to overseas markets, and a distinctive New Zealand dairy sheep breed, Dairymeade, has recently been registered.

In the past few months, new sheep dairy genetic material has been successfully imported into New Zealand for the first time since the 1990s, to add to the quality of the country’s stock and improving New Zealand’s ability to compete on a global scale.

At the 2017 Sheep Milk New Zealand Conference underway today in Palmerston North, scientists from AgResearch, Massey University, University of Otago and Callaghan Innovation are presenting the latest research into sheep milk, including science made possible by a $6m fund from the Ministry of Business Innovation and Employment (MBIE) - “Boosting exports of the emerging NZ dairy sheep industry”.

“While sheep milk - and products from it like cheese - may still seem an unusual concept to many New Zealanders, its qualities are already well recognised around the world,” says AgResearch scientist Linda Samuelsson.

“There are a number of pieces of research being presented at the conference that further underline the benefits sheep milk has to offer when it comes to nutrition and digestion, and how we can enhance milk production.”

“For example, in a study using rats we found that sheep milk made solids pass through the animals’ systems rapidly – which we’d expect would mean improved gut comfort, reduced constipation and general improvement for a sluggish gut.”

“In another study with rats, sheep milk proteins were more readily digested than cow milk proteins, with higher levels of essential amino acids. A further study shows a major waste stream from sheep cheese – whey – has the potential to be processed into a stable base ingredient for beverages or soup stocks under controlled circumstances.”

Associate Professor Craig Prichard, from Massey University, says aside from the health benefits, there is exciting potential for the development of innovative new sheep milk products such as cheeses.

“We know the sheep milk products have distinctive characteristics depending on what region of New Zealand they come from, so there is a real opportunity to develop some really distinctive regional offerings that you wouldn’t find anywhere else.”

It is home to a large dairy sheep operator, Antara Ag, which exclusively supplies Blueriver Nutrition HK, milking 15,000 East Friesian-Poll Dorset ewes on three Southland farms. It manufactures infant formula from sheep’s milk for export to China, the first company in NZ to do so.

Ultimately the company intends to take on farmer suppliers in what may be a syndicated ownership structure.

McCallum says the central North Island also has sheep milkers, for example, Waituhi Kuratau Trust milking 3000 ewes near Turangi. And Landcorp is starting this season in partnership with SLC Group.

The companies formed Spring Sheep Dairy, focused on high value products rather than bulk dried powder exports.

This group is now milking 3000 ewes on Wairakei Estate between Taupo and Rotorua. Their milk is processed at Hamilton’s Innovation Park into high value yoghurt, pro-biotics, ice cream and protein products aimed at the fitness market.

McCallum says as rural catchments face stricter control of farm nutrient losses and management, converting more land to dairying gets tougher. But dairy sheep, with their relatively low level of nutrient losses, are an option.

“It appears to be an industry whose time may have come. For many sheep farmers seeking a succession plan, sheep milking may provide a pathway to helping boost farm returns for the next generation to buy into, without necessarily converting the entire farm.”

Globally the dairy sheep market is estimated to be worth US$8 billion at the farmgate, 2% of the dairy cow milk market. But westernised Asian consumers with lower lactose tolerance prefer sheep’s milk. It averages 18-19% milksolids versus about 12% for cow’s milk.

Returns from the milk are typically $2/L – $17/kgMS.

Work by Nuffield scholar Lucy Griffiths identified some of the short term issues facing the industry in its efforts to expand. A key one is the need to avoid the usual approach to marketing bulk commodity type product and instead focus on high value niche products in health, infant formula and gourmet food.

A robust financial model is needed to show farmers the financial benefits of dairy sheep, she says.

Keith Neylon, director of Antara Ag, Southland, and founder of Blue River Dairy, says his company will milk more sheep next year. The company has grown its genetic base and can offer genetic stock to new farmers.

“Our growth has been demand led, not dissimilar to what the dairy goat industry has also experienced. We are number-two in the world in recognition of quality and it has taken us only 10 years to achieve it. Our best cheeses are renowned globally now, including our Blackmount cheddar as a gold medal winning cheese.”

Neylon says the scale a new dairy sheep farmer may want to operate on will depend upon their financial position and their equity in their property that would enable them to adapt the farm to dairy sheep.

Milking sheep is much easier and simpler than cows, but it takes much more dedication and attention, says John Ryrie, sheep dairy manager at Spring Sheep Milk.

“You need good stockmanship to look after sheep,” he told Rural News.

A Scotsman, Ryrie has been in New Zealand for the past year as farm manager for Spring Sheep but has been sheep milking in the UK for 20 years.

“They are less forgiving than cows,” he says. “If you get the nutrition wrong for a few days then they won’t forgive you and give you the milk back. Once you get that nutrition wrong you lose that milk regardless of what you do afterwards, whereas cows are more forgiving.”

Sheep have a better memory than people realise, he says.

“Once they’ve got a system they will follow that system or that route back and forth to paddock without dogs. They will go themselves, they will come in themselves. They will come into the parlour themselves, they will go through the parlour and exit themselves.”

Ryrie says sheep are not as silly as people make out and have a very good long term memory.

“So if we come out of season and we dry them off and start up a new season, they will follow the routine we gave them the year before. Once we get them trained initially, it is easier and simpler for them to follow what we need to do.”

Ryrie thinks the potential for sheep milk is huge.

“I’ve travelled in Europe and I have travelled in Canada in the past and in the market the demand for sheep milk, as far as I can tell, exceeds supply by quite a factor worldwide.

“The main factor is to get the link between the consumer and production right, and I think NZ has that under control.

“In a lot of other countries they don’t have that link set up between demand and production.”

He says onfarm production needs to increase in NZ to make sheep milking viable and this comes down to genetics and nutrition: “they go hand in hand”.

“You can have good genetics, but if you don’t have good nutrition you won’t make the same gains.”

It's not the time yet for farmers to start getting into dairy sheep, but those interested need to keep a “watching brief” on the Government's new Primary Growth Partnership programme.

So says Spring Sheep Milk chief executive Scottie Chapman.

“In the first instance we have to get the model to work,” he told Rural News.

“New Zealand has been doing this for about 10-15 years and we are still well behind best practice and ability to actually make this work commercially.”

Chapman says the whole purpose of the Primary Growth Partnership programme, in the short term, is to get a model which works, builds interest and gets people involved to come and see it.

“In time, once we’ve got a model that works, we will look at extending it and encouraging other farmers to get involved,” he says. “It is still a few years before they can make it work.”

But Chapman is convinced that long term it is an opportunity for farmers.

“I would suggest to farmers, keep a watching brief, keep an eye on it, follow the numbers, follow what we are doing; it will all be public.”

He believes the most logical places for farms will be near processing, mostly around Waikato.

“Logic says in the short term that is where the opportunities will be. How it plays out in the long term remains to be seen.”

The PGP has several parts to it, he says.

“One is getting the market insight so we are getting consumer demand; the next is research and development to produce those products the consumer wants; the other part is onfarm management and the genetics.”

Chapman believes that NZ has a sensational ability to convert sheep milk into products of value.

“So there is no point in replicating the stainless steel that exists in the dairy industry. It is incredibly well run and looked after so we will continue the current dairy processes; we don’t need to reinvent that wheel.”

Spring Sheep Milk currently uses Waikato Innovation Park’s dryer for the bulk powder then it moves on to processing and canning plants.

“That’s only the powder; we also have gelato and other products. We can use existing NZ players and we will. It is another great advantage for NZ Inc.”

Chapman says they can pick and choose what processing facilities they need, according to what consumers say they want, instead of building a factory and having to process the product.

“It’s global, it’s in the Western world as well. There just happens to be a bigger prevalence in Asia. For them goat or sheep milk are a lot more digestible.

“So the three factors we are selling on are taste, digestibility and nutrition.

“Sheep milk products provide an alternative for those who potentially have a bovine intolerance. Bovine milk is a very good healthy product for most people but if you have an intolerance, there’s an alternative that has the calcium and protein without the digestive issues.”

The dairy sheep industry in New Zealand will be "turbo-charged" by a new $31.39 million Primary Growth Partnership (PGP), the Primary Industries Minister, Nathan Guy, claims.

Guy says the Sheep Horizons Three PGP programme will take the industry from revenues of about $10 million a year to $200m-$700m by 2030.

However, one MPI estimate puts that figure at $100m. The industry would only grow to about $33m by 2030 without the PGP programme aiming to deliver a market driven end-to-end value chain, according to this estimate.

MPI will put $12.56m (40%) into the new programme, and Spring Sheep Milk Co $18.83m – a total of $31.39m over its six year life.

Spring Sheep Milk Co is a 50/50 partnership between Landcorp and several NZ investors through SLC Ventures LP.

Spring Sheep Milk Co chief executive Scottie Chapman believes there is significant and growing demand for sheep milk, especially from Asia, where consumers like its nutritional value, flavour and digestibility.

"To achieve a sheep milk industry delivering domestic and export returns in the upper range of $700m, NZ will need up to 55 farms managed by farmers with specific sheep milking expertise," he says.

"The current farming model in NZ won't achieve this, which is why this joint investment by ourselves and MPI is so critical."

Spring Sheep Milk Co operates one farm with around 4000 East Friesian sheep, near Taupo.

MPI and Spring Sheep Milk Co are now negotiating a contract so the programme can formally begin.

MPI director-general Martyn Dunne says MPI wants to ensure the programme has wider benefits. It will look at genetics and other issues that enable the programme to be truly of national benefit. It has a programme for marketing and development, research and genetics.

"It also includes developing farming and environmental systems, which are topical these days, as is the social licence to be able to carry it out. They will be building the right capability and skills required for successful dairy sheep farming in NZ," Dunne added.

"I am certain we will develop a stream of people with specific skills in NZ in the sheep milk industry that will grow and benefit in the wider sense not only primary industries but dairy in its broader sense."

It also includes developing the land farming component, in which Landcorp will play a large role.

Chapman told the launch of the project in Auckland recently that they have a unique opportunity to strengthen NZ farming by getting it right in the market first. They will match the product to consumer demands and work backwards.

Sheep milk is worth at least $10 billion per annum globally and is growing at 10% globally.

Guy says NZ now produces about 160L/ewe/year and there is opportunity to grow by at least an extra 100L/ewe/year. However, the current NZ cost structure is higher than in other countries.

"There's opportunity to drive those costs down and increase the sale price by about $1/L."

Genetic development is an exciting opportunity – developing a strong multiplier NZ flock.

"The flock size and genetic pool in NZ is not great. If we are going to turbo-charge that we need to get the right size, get some AI, get some embryos in and grow the size of our nucleus."

Guy says the NZ industry needs to look at a prototype for housing, the best pasture species, work the animal husbandry model, develop onfarm trialling and produce a technical manual.

There will be open field days for NZ farmers to get involved and engaged.

The market insights will put the consumer at the centre plus developing high value products.

Maui Milk has acquired a 770ha farm near Lake Taupo and is converting it to a sheep milking operation aimed at achieving $4 million farm income within two to three years.

Waikino Station has been making $700,000 annually as a traditional sheep and beef operation. The new joint venture plans to start milking 4000 ewes at Waikino by spring 2017.

But despite this big forecast, Maui Milk general manager Peter Gatley told Rural News that farmers interested in converting to sheep milking should hold off until they have the template right.

He says big gains still need to be made in New Zealand's per ewe milk production.

Maui Milk is a joint venture of the Waituhi Kuratau Trust – milking sheep west of Lake Taupo since 2007 – and the Chinese marketing company Super Organic Dairy. Maui Milk now milks 2500 sheep at its 500ha sheep and beef property.

Waikino is still part of the joint venture, but a totally separate farm and has been largely funded by Super Organic Dairy. Gatley, a former LIC genetics manager, and ex-CRV chief executive Jake Chardon have also bought into the farm.

A large area has already been turned over and is going into lucerne, plantain and clover, Gatley says. Plans for the actual conversion are in place using French rotary platforms designed specifically for milking sheep.

The progeny of an embryo programme are already on the farm and to speed things up the company brought in 4000 Coopworths to be put across East Friesian lambs. That will give it many first-cross 50% East Friesian-50% Coopworth. A subsequent generation could have 75% dairy-sheep genes.

"It is sort of like starting a dairy farm with Angus cows and basically breeding across to a dairy genetic base," Gatley says.

The company has had much interest from farmers wanting to convert, but it tells them, "let us create something you can copy".

"We would prefer to break the new ground ourselves; we are not keen to encourage people to go off on different tangents," he says.

"We think we have a good plan – a much more productive dairy sheep operation than is currently in place in NZ."

The company has learnt lessons from the existing operation and from France, Israel, Netherlands and Germany.

"We have pulled that together and designed a system we have a lot of confidence in. We want to put that in place and when it's real, when it is operating, we will ask people to take that as a template and convert at that stage. We are not asking people to go taking risks and create stuff from scratch," Gatley adds.

"If they copy what is currently in place... we think significant improvements can be made. We have the opportunity to start with a Greenfield operation; we will not replicate what we've got, we can see big improvements in production. We need much more efficiency in production per unit.

Those seeking to grow the fledgling sheep milk industry have just taken a big step forward in breeding a composite sheep especially for New Zealand conditions.

The Awassi breed, originally imported to supply meat and milk to Middle Eastern markets, is to provide much needed genetic diversity to existing flocks.

The Saudi-owned Hawkes Bay-based enterprise known as Awassi NZ has agreed to make rams available to cross with the East Friesian breed on which the industry currently depends.

Dr Jock Allison had a lead role in the importation of both breeds over 20 years ago, and regards this as a big step forward. "The hybrid of these two breeds is well established in the Middle East and Mediterranean regions where it is known as the Assaf breed. It is a dual purpose animal much hardier than pure East Friesian, and the hybrid vigour is a bonus".

By coincidence, the head of Awassi NZ, George Assaf, shares the same name as the hybrid, but this had nothing to do with the decision.

"We have had a long relationship with Jock Allison and because we could this to be a good benefit to NZ farmers when he asked if we would help out, we wanted to say yes". He is convinced the Awassi will add considerable value in New Zealand through improved milk yield and especially high solids (fat and protein). Importantly, the Awassi is a very hardy sheep. Awassi NZ chose the breed as the best option for the proposed live export trade to the Middle East because this hardiness was a proven advantage on live shipments made previously. They also adapted well when farmed in NZ.

The pure East Friesian ewes being mated to the Awassi rams derive from a stock of 1700 embryos retained by Jock Allison since the late 1990s. These were purchased in 2015 by Jake Chardon and Peter Gatley, better known for their long involvement in breeding of dairy cattle (CRV and LIC) and deer (Deer Improvement).

The pair are now part of a Maori/Chinese joint venture called Maui Milk based near Taupo, and are supplying rams to breed dairy sheep to enable new suppliers to be established. They recognise the importance of new blood.

Gatley says this is the key to productivity improvement. "We have access to everything else we need. We can improve nutrition and bring in specialised milking equipment, but until we are able to import new genetic material, the Awassi is our only source of genetic diversity".

Chardon agrees. "The East Friesian is a great milking sheep but it is bred for the European barn environment, so we need to introduce something else to create a dairy sheep for our pastoral system. Awassi NZ have invested a lot in creating their breeding operation, and we appreciate the trust they have shown in allowing us to access their rams."

A big challenge to the New Zealand sheep milking industry is that a lot of the known science is based on overseas indoor, or mixed indoor-outdoor systems.

New Zealand has an the outdoor pasture-based system.

AgResearch's Dr Sue McCoard says overseas milking sheep are often fed on a 'total mixed ration' (TMR) – a mixture of conserved forage and concentrate, or using high concentrate feeding systems.

But McCoard reckons there is a lack of scientific data on how to optimise dairy sheep production on NZ's pasture system and that we need to fully understand how our system works to get the best long term results from our milking sheep.

McCoard is working alongside Dr David Stevens' in the onfarm, MBIE-funded Competitive Sheep Dairying programme, led by Dr Linda Samuelsson; this is aimed at improving feeding, management and farming systems to enhance lifetime milk production from a ewe and optimise lamb rearing systems. The wider programme also includes understanding the unique compositional and functional attributes of the milk to support novel product development, and the environmental footprint, of dairy sheep systems.

"We are particularly focused on the impact of nutrition on the performance of the animal. Nutrition in early life is important for survival and growth of the young lamb either as a replacement animal to go into the milking flock or for meat production," she explains.

"Our research aims to optimise both artificial (i.e. by hand) and natural rearing systems, to reduce mortality and to deliver healthy lambs that grow well, and to optimise their lifetime performance. An important aspect of this is how we feed them in early life and how that impacts the future performance of that animal."

McCoard says the aim is to get more than just an adequate lamb at the end of the process. They are interested in the implications of early life nutrition on the physiology of the lamb for her future growth, health and reproduction and milk production – understanding what is going on inside the animal and how nutrition and management affects these production traits.

She says organs and tissues undergo substantial development and growth in early life (prenatal and soon after birth) and the researchers are particularly interested in the formation of the mammary gland and how nutrition pre- and post-weaning affects the development of that gland, because it can affect milk production potential.

Their research is indicating that the period after weaning (12-20 weeks) is important for mammary gland growth leading up to puberty, but the long-term implications for milk production are still being evaluated.

"We have been looking at what to feed young ewe replacements and how this affects the development of the mammary gland and what that might mean for her future reproduction performance and the implications for her milk production. The early life nutrition and rearing research is to develop systems fit for purpose, in terms of cost-benefit, production performance and practicality."

In NZ a lot of research has been done on growing lambs faster post-weaning using the 'rocket fuel' pastures plantain, chicory and red clover. While this has positive implications for growing lambs faster for slaughter, the outcomes of rapid growth may have trade-offs for mammary development in future milking ewes; so it is important to better understand what are the optimal feeding systems for young ewe replacements for dairy sheep operations, McCoard says.

"Overseas studies have shown that in terms of mammary development, growing lambs too fast when they are young can adversely affect their milk production. Whether that actually occurs in our pasture-based systems we don't know because it is harder to get animals really fat on a pasture-only diet versus grain-based concentrate feeding systems.

"Feeding during key developmental time windows, such as when the mammary gland is forming prior to puberty, is important and understanding what to feed, how to feed and when to feed is quite a big challenge," she says.

In some overseas dairy milking systems, the lambs are reared on the ewes until weaning and then the ewes are milked for commercial production. But she notes that 25% of a ewe's milk production is in the first month, so these systems can limit the yield of commercial milk.

"In addition to our research into artificial lamb rearing systems, which enables ewes to be milked soon after lambing, we have recently experimented to evaluate the potential of weaning naturally reared lambs early in lamb growth as well as commercial milk production from the ewes," McCoard adds.

"We separated the lambs from their mothers for a short time during the day from two weeks of age. This separation encourages them to eat solid feed which develops the rumen which in turn supports the transition off a milk diet onto pasture which occurs at weaning. It also enables those ewes to be milked once a day, following which they get reunited with their lambs."

McCoard says the lambs were weaned from four weeks of age versus five-six weeks for the standard system. She says their research showed that early separation of lambs from the ewes, coupled with early weaning, does not affect the pre- or post-weaning growth rates of the lambs or their survival and health.

"It's an ongoing piece of work with the ultimate goal being a system that enables natural rearing of lambs while increasing commercial milk production."

Last season they were not able to measure individual ewe milk production, but this season they will be able to. However, she says it appears that this season has resulted in an estimated 25% increase in the total commercial milk yield, consistent with overseas data.

Exciting, fun and having a real practical application is how Sue McCoard describes their work. She says working with some of the major players in the sheep milk industry is rewarding and there is a good interchange of ideas between farmers and scientists to obtain a practical and commercial outcome.

Well, a boutique Australian sheep milking farm in Tasmania is now making a popular vodka using whey from sheep milk.

Diane Rae, an owner of the farm, Grandvewe Cheeses, was in New Zealand recently for the sheep milking conference and revealed that her son has developed the world's only sheep vodka – so they think.

A 700ml hand-painted bottle, signed by her son Ryan Hartshorn, costs $A90 – rather more than most NZ farmers get for a lamb these days. And he has made a vanilla whey liqueur which sells for $A40.

Grandvewe is a multi-faceted business based on sheep cheese making; other products are also sold in their café and function centre. And their tourist operation attracts about 40,000 visitors annually.

Rae says the cheese production is a relatively small operation

"We have about 200 dairy sheep of which we milk 80-100 each year. We process 25,000-30,000 L of milk each year, but our products are high-end and we have won numerous awards for them.

"We sell our products online, at the farm and at various gourmet foodie shows around Australia. The aim is to tell our unique story and this works well. We also sell about 10% of our products at selected stores and direct to top Australian chefs," she says.

Grandvewe makes about 12 different varieties of cheese with such appetising names as Blondie, Brebichon, Cannonball, Pamela, Pampino Sapphire Blue and White Pearl. They also produce other delicacies like sheep milk ice cream, pinot paste and smoked mutton sausage.

For help around the farm Rae uses 'woofers' who stay for a minimum of a month.

"We train them in some of the work we do, so for example they look after our sheep, help us milk them, help us pack the cheese and do a lot of the washing up in the café because we are an onfarm tourist operator as well," she says.

Gatley heads the company, a joint venture between the Waitiuhi Kuratau Trust (WKT) on the southwest side of Lake Taupo, and a small group of Chinese marketing and distribution experts. He says while there is room for expansion in the industry it will be done to match market demand.

"I don't see it replacing bovine at all. I certainly don't see the sheep driving all the cows into the sea – no way at all," he told Rural News.

"Take the perspective of the dairy goat co-operative – a great business with great products, a solid base, good distribution, some happy suppliers and a waiting list of farmers keen to be involved. But they have been going for 20-30 years and they are turning over about $180 million. If we could emulate the sort of thing the dairy goat co-operative has done, but do it in 10 years that would be great," Gatley says.

WKT has farmed sheep and beef for many years, but just eight years ago embarked on a sheep dairy operation. While it worked well it lacked good access to market, but this changed when the Chinese business people heard about it.

Since the joint venture was formed, Gatley – whose background is in genetics – has seen a fundamental change in way the business (with 3000 ewes) has been run.

"With the demand for more product we changed the system, which previously had been low input, low output with lambs reared at foot and ewes milked once a day. There was not a huge emphasis on high-energy nutrition, but now we have geared that up, rearing about 2500 lambs directly onto the platform and getting the full benefit of the lactation of the ewes," Gatley explains.

"We have fed the lambs as best we could and milked the ewes twice a day, herd tested them, culled out the bottom end and identified the best ones for breeding."

All the milk produced at WKT goes for processing at Waikato Innovation Park into milkpowder. The reason is that powder is a stable form, easy to handle, doesn't need refrigeration and has a good shelf life, Gatley says.

"It's beautifully packaged and marketed in Shanghai and surrounds and we need quite a bit more just to satisfy demand and to give us some efficiency in our process, as it is very expensive to make powder in small batches."

A world expert on the sheep milking industry says UK farmers would be envious of the level of research being done in New Zealand into sheep milking.

John Ryrie, from the UK and now managing the Spring Sheep Dairy operation on a Landcorp farm near Taupo, told Rural News that the NZ sheep milking industry is backed by good research. He says the research in NZ is by highly competent people and supported by government agencies.

But while there is growing interest in the sheep milking industry in NZ, Ryrie says people need to have realistic expectations of what can be achieved and not draw comparisons to the bovine milk sector. He says it won't replace bovine alone in the quantity of milk produced.

"I also don't think it's a fad. Fads signify to me short-lived and this is not short-lived. There is a market in China among a large population with specific needs for sheep milk products for nutrition and digestive requirements," Ryrie explained.

"The other factor is a cow will give you 3000L a year in NZ, whereas a sheep will do 400 to possibly 800L a year. So it's important that sheep milk is not a commodity product. This is a product that can be refined and produced for specific markets and for specific people in the population."

Ryrie says much changed in the NZ sheep milking sector in the space of a year, as reflected in this year's conference. A year ago the talk was about the potential of the sector and what could be done, he says.

"This year we have more sheep milking flocks established, we are looking at components of milk and where to go with those components in the market. It's a credit to the organisers of the conference and to the research bodies involved and all the farmers who have taken up the challenge of sheep milking."

Staff trained and ready to go

A year ago John Ryrie moved from the UK to NZ to head up Spring Sheep Dairy, a joint venture between Landcorp and a marketing company, SLC.

The first year has passed in setting up the farm and training staff in the art of milking sheep. Ryrie says when the new season starts, the staff will be ready to go and will understand the systems – no stress.

With the initial setup done, Ryrie says they are now looking to improve the genetic composition of the flock.

"We are looking to import genetics to improve and broaden the bloodlines within our flock. We will probably bring in a mix of semen and embryos," he told Rural News. "Semen is the quickest fix because we can get a large number of semen straws in to cover a large number of our ewes in the short term; but to get very specific, high-quality bloodlines we'd use embryos."

The latter will take time given the approval process which Ryrie supports. He says safeguarding NZ's biosecurity is paramount. But once approval is given it will be a great opportunity for NZ to expand its genetic pool of milking sheep.

Ryrie says he's delighted to work in NZ and while there are challenges – including facial eczema – he believes these can be overcome. NZ's drier climate will result in less foot problems and overall the sheep milking industry will do better here than in Europe.

A warning to dairy farmers: a move to sheep milking is probably not an option.

An organiser of a recent sheep milking conference, associate professor Craig Prichard, of Massey University, says sheep milking is never going to come anywhere near replacing the bovine industry.

He says a Taranaki farmer called asking what sort of sheep milking operation he could run on 100ha.

"I said 'you're asking me the wrong question'. I asked 'where is your market, where is your processor and who are you going to sell your milk to?' Often people in the bovine industry are so used to having someone take their milk. This farmer was asking the wrong question.

"Everyone in the sheep milking business has to solve the market and the producer problem first. They must ask, 'where is my market and who am I going to sell to?' That drives the production process. In the bovine industry they do not think market first; they are a supplier driven industry."

Prichard says every bovine dairy farmer in NZ struggles to see their market; it's an institutional problem. He says he knows of many dairy farmers who say the industry is not connecting with customers.

"On the other hand the sheep milking industry is putting customers right at the core of it and they are the ones who are going to drive this sector."

Prichard says the sheep milking conference had good science presentations and showcased where the industry has got to in a relatively short time.

New Zealand's sheep milk industry is set to benefit from new research by AgResearch.

AgResearch scientists presented the initial results from two years of research from the $6 million MBIE-funded programme this week at the second Sheep Milk NZ industry conference in Taupo; 200 people are attending.

The research looked at boosting exports of the emerging dairy sheep industry, ranging from composition of New Zealand sheep milk through to best practice effluent management.

"New Zealand's dairy sheep systems are unique to us, and we have the natural advantages of our year-round pasture-based farming. We need to establish the particular qualities and advantages our systems produce," says research leader and AgResearch senior scientist Dr Linda Samuelsson.

"If we are to make claims about the benefits of New Zealand sheep milk, we need the data to back it up."

Differences established so far include research by Marita Broadhurst analysing 500 milk samples collected at different times of year over the last three years. It shows that on average, New Zealand sheep milks have higher levels of protein and twice the fat of cow's milk, with high levels of calcium, phosphorus and magnesium.

Dr Wayne Young and Samuelsson's work show sheep and cow milk cause different effects on gastrointestinal physiology in rats. "We also observed that rats fed sheep milk required less solid food than rates given raw cow milk to maintain the same level of growth. This supports the view that sheep milk is an excellent source of nutrition," says Young.

Other goals for the research include optimising feed and nutrition systems and developing criteria to ensure environmental sustainability of sheep dairying in New Zealand.

Dr David Stevens presented research looking at liveweight gains of ewe lambs between 12 and 20 weeks on puberty and mammary gland development. "The research was to gain information about the systems we run because we can't look to international literature. We have to do it ourselves," he says.

Dr Sue McCoard presented research showing that early weaning (from four weeks vs standard weaning of six weeks) can increase milk yield without compromising pre-weaning or post-weaning growth rates.

Establishing guidelines to ensure to limit the industry's environmental impact was the focus of work presented by Natalie Watkins and Bob Longhurst who looked at the volumes and nutrients generated in sheep dairy effluent. They presented details of the effluent characteristics and provided best practice management guidelines.

MBIE national manager biological industries Max Kennedy says the research is integrated across on and off farm and brings together a breadth of New Zealand expertise including Callaghan Innovation and University of Otago.

"This is the beginning of the New Zealand dairy sheep story and how New Zealand sheep milk is different to the sheep milk in the rest of the world. This is research to enable us to create that early New Zealand brand story," he says.

Sheep have been raised for their milk for thousands of years and were milked before cows.

In New Zealand, however, we are far more familiar with sheep being raised for their meat and wool – but there is growing interest in farming dairy sheep.

Sheep milk is nutritious and is richer in vitamins A, B and E, calcium, phosphorus and magnesium than cow's milk. It contains a higher proportional of short- and medium-chain fatty acids (the "good" fatty acids). The fat molecules in sheep milk are smaller than those in cows' milk so are more easily digested.

While lactating ewes of any breed can be milked there are specialised dairy sheep breeds, such as the Chios (from Greece) and Awassi (in New Zealand, but originally from Israel). These can produce about four times more milk per lactation than meat and wool producing breeds.

Unfortunately, sheep and goats are susceptible to getting footrot – a painful infection of their hooves. It is a major welfare issue; causing significant economic cost to sheep production worldwide.

In an international collaborative study with scientists from the School of Veterinary Medicine, at the Aristotle University of Thessaloniki in Greece, Professor Jon Hickford of Lincoln University studied genetic variation in a gene marker for footrot resilience in the Greek Chios sheep.

The research found that the breed was susceptible to footrot and that the gene-marker test developed in New Zealand was a useful tool for finding sheep that were less susceptible to the disease. This compares with what Hickford had already found in Awassi sheep in New Zealand.

"This suggests that if we intensify and farm milking sheep then footrot may be an issue," explains Hickford. "Farmers would need to be diligent about checking susceptibility to footrot of any dairy sheep, especially any sheep imported into to New Zealand to build a sheep milking industry.

"While it's true, we don't have Chios sheep here, the observation that the footrot-gene marker test we have developed works in them and the Awassi, says it would be a useful tool in any expanded milking sheep industry in New Zealand."

Hickford says, to start with, farmers could get any rams they are considering purchasing tested to ascertain their footrot susceptibility before making a final decision.

"They could then selectively breed for increased tolerance to the disease, which would reduce any adverse cost or welfare issue stemming from a footrot outbreak or ongoing disease challenge," he adds.

"This is an opportunity for farmers contemplating the change to a new form of sheep production, to capitalise on the considerable research already undertaken in this field."

Rising interest in dairy sheep is about to be matched by the availability of milking ewes thanks to 15-year-old frozen embryos.

The pure East Friesian embryos, which have been frozen in time since the late 1990s, will be an essential part of a new genetic improvement programme. Dr Jock Allison, the original importer of the breed, retained the unique gene pool.

Maui Milk general manager Peter Gatley and Jake Chardon attended a dairy sheep conference at Massey in February this year and found themselves in conversation with Allison.

They were surprised to discover that 1700 East Friesian embryos still existed in their pure form, untouched in liquid nitrogen for more than 15 years. A deal was done on the spot, and within weeks, the entire stock was surgically implanted in recipient ewes at Awapai in Hawkes Bay, owned by Simon Beamish, one of the Rissington Breedline founding partners.

Impetus for the initiative has come from the creation of Maui Milk, a joint venture partnership between New Zealand farming and Chinese marketing interests.

Mated over maternal breeds such as Poll Dorset, Coopworth or Highlander, the result is known as an 'F1', or first cross, a hybrid with milking ability, constitution and hybrid vigour.

Similar ewes have formed the basis of the flock of 3000 milked by the Waituhi Kuratau Trust, the Maui Milk joint venture partner farming west of Lake Taupo.

The females resulting from the embryo programme will be milked in 2016, providing valuable data on the comparative performance of the pure strain under local conditions, and the top performers will be selected as embryo donors. Rams from various bloodlines will be retained for progeny testing, and the remainder will generate up to 10,000 crossbred milking ewes in their first year.

Allison is delighted to see the potential of the gene pool being realised. "I didn't want to see those embryos go out 50 or 100 at a time because this would dissipate the value. There's a critical mass of genetic material there that these guys can work with. I've no doubt they'll create something special".

This initiative will not only drive genetic gain, but also carry out farm system development to provide a template for Kiwi farmers to replicate. It is known as Southern Cross Dairy Sheep Technology.

Landcorp chief executive Steven Carden says his company plans to set up a second sheep milking farm on one of their properties near Taupo.

Landcorp have recently begun milking 2,700 East Fresian ewes at their St Kilda farm in the north Taupo area. Carden says while this is in some ways a pilot project, the aspiration of the company is to make this into a substantial business and an industry in its own right. Spring Sheep Dairy as it is known, is a joint venture with the agribusiness investment company SLC Group to produce high quality sheep milk for mostly Asian markets.

In just eight months Landcorp has achieved the almost impossible by turning bare pasture land north of Taupo into one of the world's most high tech sheep milking operations.

Twenty two year old Thomas Macdonald, a Landcorp business manager has project managed this unique $3.9 million greenfield operation which includes the building of the new shed, the purchase of stock and recruitment of a manager, five full time staff and twenty casual staff.

The milk is being processed by Waikato Innovation in Hamilton.

Unlike a typical cow shed, the sheep milking shed is quiet, there is less water being used because there is less effluent and the milking of each sheep is over in just a couple of minutes. This shed can milk 1000 sheep an hour. Milking is twice a day. But it's the array of technology that catches the eye of first time visitors to the shed.

"This parlour was built from the ground up with technology in mind. We have got individual metering of animals per day we are the first one the world to measure fat protein per animal per day," says Macdonald.

It's the data gathered in the shed which will later to be used to select the best animals to breed from in the future. At present about half the flock being milked are pure East Fresian with remainder crosses and milk production varies between these, with the pure breds producing about two litres at each milking and some of the crosses about 500mls. The aim is to produce a much higher yielding flock with surplus lambs being reared for the meat industry.

Sheep milk has the potential to become a $200 million industry within 10 years, says Waikato Innovation Park chief executive Stuart Gordon.

A new $5 million FoodWaikato wet processing plant opened last week will help grow the sheep milk sector, he says.

One of its first sheep milk customers is Spring Sheep Dairy, a joint venture between Landcorp and businessman Scottie Chapman. The company will use the dryer to make value added sheep milk products for export.

Gordon says FoodWaikato is keen to help grow the sheep milk industry.

“There is a real opportunity to grow the industry to a $200m business. Spring Sheep Dairy is growing markets and supply, we will be manufacturing for them,” he told Rural News.

The new plant is expected to inject an extra $38.5m per year in export revenue back into the New Zealand economy from the sale of new, value-added consumer products directly produced there.

The first stage of the plant, a spray dryer, was opened in May 2012, funded by Innovation Waikato Ltd and a Government grant of $3.95m. It cost $12.8m to complete.

Gordon pointed to the success of the Hamilton Diary Goat Cooperative, which used the FoodWaikato dryer while building its second dryer.

“There is no reason why the sheep milk industry cannot achieve something similar to dairy goats,” he says.

“We try to get people to build markets and supply, at the same time providing bridging manufacturing facilities. We keep them going for three to four years and when they have enough market and supply, they set up their own plant and move on.”

Gordon says Food Waikato allowed the co-pop to build its supply and markets and invest in a new dryer while helping with processing goat milk.

FoodWaikato’s second stage was largely funded by a $3m equity injection from Callaghan Innovation and is not just limited to milk processing. It allows specialty ingredients such as vitamins, minerals and oils to be wet blended with milk or fruit juice prior to being spray dried.

“The functional and regulatory constraint of the plant as it was, meant we were limited to processing liquids in the form they arrived in at the site, which created challenges for many of the target firms FoodWaikato was created to assist,” says Gordon.

“Higher value products like infant formula and aged care formula tend to involve mixtures of ingredients, but mixing offsite and transporting to FoodWaikato created regulatory, product integrity and processing challenges.

“So we have added ‘wetside’ processing capability that now allows the mixing process to be done onsite, meaning FoodWaikato can now provide a greater level of development and innovation capability to dairy companies – cow, goat and sheep – and to fruit and vegetable producers.